KB Home Profit Beats Estimates, Climbs 65%

Bad weather in the West did little to dampen KB Home’s quarterly results as the Westwood-based home builder Monday reported higher-than-expected first-quarter profit.

KB said net income jumped 65% to $122.7 million, or $2.82 a share, from $74.2 million, or $1.75, a year earlier. The results surpassed the $2.57-a-share average estimate of analysts surveyed by Thomson First Call.

Revenue for the period ended Feb. 28 rose 22% to $1.64 billion.

Much of the gain was attributed to wider profit margins and higher home prices; the average price of a KB home sold during the period was $236,300, a 10% increase from the year before.

About 20% of KB’s homes are sold in California. For that reason many expected the heavy rainstorms that hit the state this winter to be a drag on its bottom line and slow new-home orders.

Neither occurred. Orders rose 23% overall, and on the West Coast, orders climbed 13%.

“Our first-quarter performance sets the stage for what we believe will be another record year in 2005,” Chief Executive Bruce Karatz said.

Indeed, KB raised its 2005 earnings forecast to $15.75 a share, which is $1.25 more than previously projected and ahead of the average Wall Street estimate of $14.59.

Rising interest rates are expected to slow the nation’s housing market. Still, 2005 is expected to be the second-best year for new-home construction, behind a record-breaking 2003, because demand outpaces supply.

KB ended the quarter with a backlog of 23,334 units, a 40% jump over a year earlier. The company’s shares rose $2.14 to $116.70 on the New York Stock Exchange before the earnings were released.